If you’re still on the fence about getting into the used car business, we’ve got you covered.
Here are 5 more reasons to start flipping cars in California:
- Profit margins that reward dealers that have invested in their process
- Great potential exit strategy due to being a business to sell once the model is built and the concept is proven
- Formal education is not needed so you don’t need a college education to make money flipping cars in California
- Car dealers create relationships that can easily transition into other endeavors
- Being a pillar of the community carries its own importance
What are the Types of Used Car Dealer Licenses can I get in California?
Retail Auto Dealers
Retailers are the most popular license type since they can interact with the public. These are the auto dealers you see on the corner. Whether small “Mom and Pop” shops or larger dealerships, these are not franchised dealers. The used car dealership business model flourishes well in California, although some of the larger cities present certain challenges.
Let’s be honest, keeping a low overhead is critical to every business. This is even more vital to the health of a used auto dealership, which is why it was important to create some content around this exact subject matter.
Click this button for an important episode from season 2 of the Your Car Dealer Podcast that discusses how to start flipping cars while living on a budget.
This dealer license type may eventually meet its end in California, however, brokering vehicles still exist. Auto brokers don’t sell cars directly to the public and they don’t buy inventory like other types of auto dealers. California Auto Brokers introduce a buyer to a seller and get paid by one of those parties, never both.
This can also be lucrative because of the dramatically decreased overhead since inventory is not purchased and employees are not needed.
Wholesale Car Dealers
These dealers cannot sell to the public, they can only flip cars to other licensed dealers. Wholesalers have less overhead in general but their profit margin is also generally not on par with the retailers. If you are not a licensed dealer, you must use the car dealer license application process and procure your license as soon as you can.
Most of the advertisements you see on YouTube that advertise how to sell cars without a lot are describing a wholesale operation. You can technically wholesale cars to other car dealers out of your home.
Flipping Cars in California without a California DMV Dealer License!
The City or the DMV will likely inform you that if you intend to sell vehicles for a profit, then you have to be officially licensed. The key here is that you don’t have to make a profit, you only need to intend to make a profit in order for you need to get your city and dealer license.
You can make a profit on those transactions but you cannot have plotted for this outcome prior if you are unlicensed.
Private Party Sales
As of late 2020, you’re able to sell up to 5 vehicles per year as a private party. That means no licenses needed, dealer education, sales taxes paid, etc. if you only want to sell 5 cars per year. The caveat is, when purchasing a vehicle and the intent is to make a profit, the DMV, your city and/or county require that you have a dealer license.
This is awesome for most people that just want to keep their full-time job and flip cars on the side. And then there are those who are not satisfied with that 5 car maximum. They sell more than 5 cars each year in hopes of never being caught by the California DMV.
Selling cars and trucks in California can be exciting for a variety of reasons. If you know how to start selling cars from home, you can even start from where you are right now. Are you ready to jump in? Let’s talk about how to start a used car dealership.
How to get a California Used Car Dealer License?
Starting a used car dealership from home or anywhere else requires you to have a dealer license. Depending on what type of dealer license you want, the requirements vary a bit. First, get your Livescans (your background check) since that is the process that takes the most time.
The DMV Dealer License infographic was created to help some of our dealers get a better picture of the steps that are involved in becoming licensed. We’d like to share it with you in hopes that it will help you through the steps since it can seem a bit overwhelming!
Another time-consuming part of the process is getting the Articles of a Corporation or LLC back from the Secretary of State. Keep in mind that you don’t have to get a Fictitious Name Statement issued by your County if you are going to get an LLC or Corporation filed.
California Used Car Dealer Checklist!
Your Car Dealer Bond is not only literally the name of our company, but it’s also part of your process of getting a Used Auto Dealer License if you want to flip cars in California.
Retail car dealers and auto brokers have to get a $50K bond in California. There’s a clause in the California DMV code that allows wholesale-only dealers to get a $10K bond instead of the $50K bond if they are going to sell less than 25 cars/trucks per year.
Here’s a video that will help you streamline the auto dealer licensing process:
The Trusted Car Dealer Resource:
Your Car Dealer Bond (YCDB) is best known for helping good folks just like you obtain wholesale rates on retail auto dealer bonds. YCDB can also help you with completing your DMV application to finalize your license.
So again, if you want to start flipping cars in California now that you have a car dealer license, we would be happy to help in any way possible! From dealer surety bonds to dealer education, the YCDB Team is here to help. We assist retailers, wholesalers, and auto brokers in record numbers. You should be next!
Call 866-357-4405 now!
We are a family-owned insurance agency dedicated to providing the best surety bond services in California!
Here is a short 7-minute video explaining your car dealer surety bond in detail and how that bond differs from dealer insurance.